UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
DAKTRONICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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PRELIMINARY
DAKTRONICS, INC.
331 32nd Avenue
Brookings, South Dakota 57006
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
15 AUGUST 2001
To the Shareholders of Daktronics, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Daktronics,
Inc., will be held at Daktronics, Inc., 331 32nd Avenue, Brookings, South Dakota
57006 on Wednesday, August 15, 2001 at 7:00 p.m. Central Daylight Time, for the
following purposes:
1. To elect directors duly nominated for a term expiring in 2004: James
B. Morgan, Duane E. Sander, John L. Mulligan.
2. To ratify the appointment of McGladrey & Pullen, LLP as independent
auditors for the Company for the fiscal year ending April 27, 2002.
3. To consider and vote upon a proposal to approve the Amendment to the
Amended and Restated Articles of Incorporation increasing the shares
authorized to be issued from 30,000,000 to 60,000,000.
4. To consider and vote upon a proposal to approve the Daktronics, Inc.
2001 Stock Option Plan.
5. To consider and vote upon a proposal to approve the Daktronics, Inc.
2001 Outside Directors Stock Option Plan.
6. To consider and act upon any other matters that may properly come
before the meeting or any adjournment thereof.
Only the shareholders of record of Daktronics Common Stock at the close of
business on 13 July 2001 will be entitled to receive notice of and to vote at
the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to be
personally present at the meeting, please complete, date and sign the enclosed
proxy and return it promptly in the enclosed envelope. If you later desire to
revoke your proxy, you may do so at any time before it is exercised.
By order of the Board of Directors,
Duane E. Sander, Secretary
July 13, 2001
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SUBMIT YOUR PROXY BY
MAIL PRIOR TO THE MEETING. Shareholders who are present at the meeting may
withdraw their Proxy and vote in person if they so desire.
Daktronics, Inc.
Table of contents
Pages
-----
Information about the meeting........................................................................ 1
Proposal #1-Elect Directors.......................................................................... 2
Executive Compensation............................................................................... 5
Performance Graph.................................................................................... 7
Report of the Compensation Committee................................................................. 7
Report of the Audit Committee........................................................................ 9
Security Ownership of Certain Beneficial Owners and Management....................................... 10
Proposal #2-Ratify Appointment of Independent Certified Public Accountants........................... 11
Proposal #3-Approve Amendment to the Amended and Restated Articles of Incorporation Increasing the
Number of Authorized Shares of Common Stock.............................................. 11
Proposal #4-Approve 2001 Stock Option Plan........................................................... 12
Proposal #5-Approve 2001 Outside Director Stock Option Plan.......................................... 13
Other Matters........................................................................................ 15
Shareholder Proposals for the Next Annual Meeting.................................................... 15
Appendix A - Charter of the Audit Committee.......................................................... 16
ii
DAKTRONICS, INC.
331 32nd Avenue
Brookings, South Dakota 57006
PRELIMINARY - PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 15, 2001
This Proxy Statement is furnished in connection with the solicitation of
the enclosed proxy by the Board of Directors of Daktronics, Inc. ("Daktronics"
or the "Company") for use at the Annual Meeting of Shareholders to be held on
Wednesday, August 15, 2001, at Daktronics, Inc., 331 32nd Avenue, Brookings,
South Dakota at 7:00 p.m. Central Daylight Time, and at any adjournment thereof,
for the purposes set forth in the Notice of Annual Meeting of Shareholders.
Shares of Common Stock represented by proxies in the form solicited will be
voted in the manner directed by a shareholder. If no direction is made, the
proxy will be voted (1) for election of the three nominees for James B. Morgan,
Duane E. Sander, John L. Mulligan, for terms expiring 2004, (2) for ratification
of appointment of McGladrey & Pullen, LLP as independent auditors for the
Company for the fiscal year ending April 27, 2002, (3) for approval of the
Amendment to the Amended and Restated Articles of Incorporation increasing the
shares authorized to be issued from 30,000,000 to 60,000,000, (4) for approval
of the Daktronics, Inc. 2001 Stock Option Plan, (5) for approval of the
Daktronics, Inc. 2001 Outside Directors Stock Option Plan. A shareholder may
revoke his or her proxy at any time before it is voted by delivering to the
Secretary of the Company a written notice of termination of the proxy's
authority, by filing with the Secretary of the Company another proxy bearing a
later date, or by appearing and voting at the meeting. This Proxy Statement and
the form of proxy enclosed are being mailed to shareholders commencing on or
about July 18, 2001.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed by the Company for the meeting, and the
number of shareholders present in person or by proxy will determine whether or
not a quorum is present. The inspectors of election will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum for all matters. Shares abstaining will be treated as
un-voted. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote by the inspectors of election
with respect to that matter. The three persons receiving the most votes will be
elected for directors and the other issues will be determined by a majority of
the votes cast.
Only the holders of the Company's Common Stock whose names appear of record
on the Company's books at the close of business on July 13, 2001 will be
entitled to vote at the annual meeting. At the close of business on June 27,
2001, a total of 18,067,950 shares after the effect of the May 24, 2001
two-for-one stock split of Common Stock were outstanding. The holders of
one-third of the shares of Common Stock issued and outstanding and entitled to
vote at the 2001 Annual Meeting, present in person or represented by proxy, will
constitute a quorum for the transaction of business. If a quorum should not be
present, the 2001 Annual Meeting may be adjourned from time to time until a
quorum is present. Holders of Common Stock are entitled to one vote per share on
all matters submitted to a vote of shareholders, except that with respect to the
election for directors every shareholder shall have the right to vote, in person
or by proxy, the number of shares owned by the holder for as many persons as
there are directors to be elected, or to cumulate the holder's votes by giving
one candidate the number of votes which is equal to the number of directors to
be elected multiplied by the number of the holder's shares, or by distributing
such cumulated votes among any number of candidates.
Participants in the Company's 401(k) plan who have Daktronics shares as one
of their 401(k) investment selections are entitled to instruct the trustee of
the 401(k) plan how to vote their shares of Common Stock. Each participant will
receive a voting instruction card to direct the trustee to vote that
participant's shares. If a participant does not timely return a completed voting
instruction card, the trustee will vote the shares allocated to that participant
in the same proportion as the shares which are voted by all participants under
the 401(k) plan.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail, but, in addition,
officers and regular employees of the Company who will receive no extra
compensation for their services may solicit proxies by telephone, email or
personal calls. The Company may reimburse brokerage firms and others for their
expenses in forwarding solicitation materials to the beneficial owners of Common
Stock.
A copy of the Company's Annual Report for the fiscal year ended April 28,
2001 is being furnished to each shareholder with this Proxy Statement.
PROPOSAL # 1 - ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, the Board of Directors
is divided into three classes serving staggered three-year terms expiring at
each successive annual meeting of shareholders. The terms of James B. Morgan,
John L. Mulligan and Duane E. Sander expire at the 2001 Annual Meeting, Aelred
J. Kurtenbach, Charles S. Roberts and Nancy D. Frame expire at the 2002 Annual
Meeting, and Frank J. Kurtenbach, James A. Vellenga and Roland J. Jensen expire
at the 2003 Annual Meeting.
The persons named in the accompanying proxy will vote for the election of
the three nominees described herein, unless authority to vote is withheld. The
Board of Directors has been informed that each of the three nominees is willing
to serve as a director; however, if any nominee should decline or become unable
to serve as a director for any reason, the proxy may be voted for such other
person as the proxies shall, in their discretion, determine.
The following table sets forth certain information as of July 13, 2001
concerning the three nominees for election as directors of the Company and the
continuing directors:
Name and Age Position with Company
- ------------ ---------------------
DIRECTORS FOR TERMS EXPIRING AT THE 2001 ANNUAL MEETING
James B. Morgan (54) President, Chief Operating Officer and Director
Duane E. Sander (63) Secretary and Director
John L. Mulligan (62) Director
DIRECTORS FOR TERMS EXPIRING AT THE 2002 ANNUAL MEETING
Aelred J. Kurtenbach (67) Chairman, CEO and Director
Charles S. Roberts (76) Director
Nancy D. Frame (56) Director
NOMINEES FOR TERMS EXPIRING AT THE 2003 ANNUAL MEETING
Frank J. Kurtenbach (63) Vice President, Sales and Director
Roland J. Jensen (70) Director
James A. Vellenga (66) Director
2
AELRED J. KURTENBACH, PH.D. is a co-founder of the Company and has served
as a director of the Company since its incorporation. Dr. Kurtenbach is
currently serving as Chairman of the Board of Directors. He also served as
President of the Company until 1999. He served as Treasurer until 1993. Dr.
Kurtenbach has 43 years of experience in the fields of communication engineering
and control system design, technical services, computer systems, electrical
engineering education and small business management. Dr. Kurtenbach has B.S.,
M.S. and Ph.D. degrees in Electrical Engineering from South Dakota School of
Mines and Technology, the University of Nebraska and Purdue University,
respectively.
CHARLES S. ROBERTS, M.D. has served as a director of the Company since
1968. Prior to his retirement in 1991, Dr. Roberts was engaged in family
practice and internal medicine at the Brookings Clinic, Brookings, South Dakota.
NANCY D. FRAME was elected as a director in 1999. Prior to her retirement,
Ms. Frame was the Deputy Director of the United States Trade and Development
Agency in Washington, D.C., a position she held from 1986 to 1999. From 1976 to
1986 she held various positions in the legal profession, specializing in
international trade and commercial law. She obtained her law degree from
Georgetown University, Washington, D.C.
FRANK J. KURTENBACH joined the Company in 1979 as Sales Manager of the
Standard Scoreboard Division, which was expanded to include other products in
1981. He has served as Sales Manager for the Company since 1982, as a director
since 1984 and as Vice President, Sales since November 1993. Mr. Kurtenbach has
a M.S. degree from South Dakota State University. Aelred Kurtenbach and Frank
Kurtenbach are brothers.
ROLAND J. JENSEN worked in various capacities from 1960 to 1990 with
Northern States Power Company, an electric and natural gas utility, ending his
service as Senior Vice President of Power Supply. From 1990 to his retirement in
January 1994, he was Chairman and CEO of NRG Energy, Inc., a Minneapolis-based
energy services company. Mr. Jensen has served as a director of the Company
since 1994.
JAMES A. VELLENGA was elected as a director in 1997. Mr. Vellenga is
currently the President, CEO and Chairman of the Board of Uptech Automation Inc.
From 1988 to 1998 he held various senior management positions at Aetrium Inc.,
most recently as the Vice President of Technology. Prior to joining Aetrium
Inc., Mr. Vellenga was a founder and Vice President of Operations of Lee Data
Corporation. During the formative years of the computer industry, (1957-1979)
Mr. Vellenga worked at Remington Rand Univac, Control Data Corporation and Data
100 Corporation involved in the design and management of computer products. Mr.
Vellenga holds a B.S. degree in Electrical Engineering from South Dakota State
University.
JAMES B. MORGAN joined the Company in 1969 as a part-time engineer while
earning his M.S. degree in Electrical Engineering from South Dakota State
University. Mr. Morgan became President and Chief Operating Officer of the
Company in 1999. He served as its Vice President, Engineering, with
responsibility for product development, contract design, project management for
customer contracts, and corporate information and scheduling systems, from 1976
to 1999. Mr. Morgan has also served as a director since 1984.
DUANE E. SANDER, PH.D. is a co-founder of the Company and has served as a
director and as Secretary of the Company since its incorporation. Dr. Sander is
currently employed at the South Dakota State University Foundation. He served as
Dean of Engineering at SDSU from 1990-1999, and taught electrical engineering
courses and directed biomedical research projects since 1967.
JOHN L. MULLIGAN was elected as a director of the Company in 1993. Since
1995, he has been employed as Vice President and financial advisor with Morgan
Stanley Dean Witter, in the same capacity as when he was employed with Mesirow
Financial from late 1990 through mid 1993. In 1993 and 1994, he served as
principal of Mulligan Financial, a financial services firm that he founded. From
1967 to March 1990, he served as President, Chairman, Chief Executive Officer
and director of American Western Corporation.
3
DIRECTOR COMPENSATION
The current non-employee directors of the Company include Mulligan, Sander,
Roberts, Jensen, Frame, and Vellenga. During fiscal 2001 each non-employee
director received, for their services as a director, a $2,000 retainer, $1,500
for each meeting attended in person, $500 for each committee meeting attended in
person (telephonic participation in all meetings at one-half rate), and
reimbursement of all out-of-pocket expenses incurred in attending meetings. The
non-employee directors also receive stock options under the Company's 1993
Outside Directors Stock Option Plan as amended. In August 2000, Mr. Jensen and
Mr. Vellenga each received 12,000 shares for each of the three years of their
term under the 1993 Outside Directors Stock Option Plan as amended, which are
subject to vesting restrictions under the plan and have an exercise price of
$5.92 per share. The numbers of shares and the option price have been adjusted
to reflect the two-for-one stock splits declared December 7, 1999 and May 24,
2001. Dr. Sander does not receive any additional compensation for serving as
Secretary of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee consisting of
John L. Mulligan (chair), James A. Vellenga and Duane E. Sander; and a
Compensation Committee consisting of Roland Jensen (chair), Charles S. Roberts,
and Nancy Frame. The Company has no standing nominating committee. The Board as
a whole performs the functions that would otherwise be delegated to a nominating
committee.
The Board of Directors held FIVE REGULAR and three telephone meetings
during fiscal 2001. All incumbent directors attended at least 75% of the Board
meetings. The Board also passed several resolutions during fiscal 2001 by
written consent.
The Audit Committee held three meetings in fiscal 2001. The Audit Committee
reviews the activities of the Company's independent accountants and the results
of audits made by these professionals.
The Compensation Committee held one meeting during fiscal 2001. The
Compensation Committee is responsible for making recommendations to the Board of
Directors regarding compensation of the Company's executive officers and stock
option awards under the Company's 1993 Stock Option Plan as amended. None of the
members of the Compensation Committee are employees of the Company and all
executive officers that serve on the Board of Directors abstain from voting on
compensation affecting those executive officers that are Board members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks with other companies and
none of the members of the committee has been an officer, employee or insider of
the Company or its subsidiaries.
4
EXECUTIVE COMPENSATION
CASH AND OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Company's Chief
Executive Officer, and each of the other executive officers, whose total annual
salary and bonus exceeded $100,000 during fiscal 2001.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation(1) Awards
---------------------- ------
Fiscal Securities
Year All Other Underlying
Name and Principal Position Ended Salary Bonus(2) Compensation(3) Options (#)(4)
--------------------------- ----- ------ -------- --------------- --------------
Dr. Aelred J. Kurtenbach 2001 $271,154 $75,000 $3,750 30,000
Chief Executive Officer 2000 225,385 62,500 1,531 40,000
And Director 1999 181,131 52,500 3,390 100,000
James B. Morgan 2001 $222,571 $62,500 $3,000 24,000
President, Chief Operating 2000 181,217 50,000 1,577 32,000
Officer and Director 1999 142,569 37,500 3,192 32,000
Paul J. Weinand(5) 2001 $112,781 $28,170 $2,620 0
Treasurer and 2000 113,350 33,170 1,573 8,000
Chief Financial Officer 1999 112,680 33,170 2,748 8,000
Frank J. Kurtenbach 2001 $127,960 $33,000 $2,789 8,000
Vice President 2000 118,389 31,250 1,584 12,000
And Director 1999 104,585 27,800 2,571 12,000
- -----------------------
(1) Annual Compensation excludes personal benefits received by the named person
to the extent that the aggregate amounts thereof were less than 10% of the
total of that person's annual salary and bonus.
(2) Reflects bonus earned during the fiscal year.
(3) Company match to employee contributions under the Company's 401(k)
Retirement and Savings Plan.
(4) The options have been retroactively adjusted to reflect the two-for-one
stock split declared December 7, 1999 and May 24, 2001.
(5) Paul Weinand has resigned from the Company to pursue other interests. As of
this printing, Aelred Kurtenbach is acting CFO and Becky Wittrock is acting
Treasurer.
5
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information relating to stock options and stock
appreciation rights (SARs) awarded to the executive officers named in the
Summary Compensation Table under the Company's 1993 Stock Option Plan as amended
during fiscal 2001. No SARs have been awarded by the Company.
OPTION/SAR GRANTS IN FISCAL 2001
Individual Grants
--------------------------- Potential Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation for
Underlying Granted to Exercise or Option Term
Options/SARs Employees Base Price Expiration -----------------------------
Name Granted(#)(4) in 2001 ($/share)(4) Date 5% 10%
---- ------------- ------- ------------ ---- -- ---
Dr. Aelred J. Kurtenbach 30,000(1) 13.0% $8.4219 11/15/2005 $69,804 $154,250
James B. Morgan 24,000(2) 10.4% $7.6562 11/15/2010 115,541 292,802
Frank J. Kurtenbach 8,000(3) 3.4% $7.6562 11/15/2010 38,516 97,601
- --------------------
(1) The options were granted under the 1993 Stock Option Plan as amended and
become first exercisable as follows: 6,000 on November 15, 2001, 6,000 on
November 15, 2002, 6,000 on November 15, 2003, 12,000 on November 15, 2004.
(2) The options were granted under the 1993 Stock Option Plan as amended and
become first exercisable as follows: 4,800 on November 16, 2001, 4,800 on
November 16, 2002, 4,800 on November 16, 2003, 4,800 on November 16, 2004,
and 4,800 on November 16, 2005.
(3) The options were granted under the 1993 Stock Option Plan as amended and
become first exercisable as follows: 1,600 on November 16, 2001, 1,600 on
November 16, 2002, 1,600 on November 16, 2003, 1,600 on November 16, 2004,
and 1,600 on November 16, 2005.
(4) The options have been retroactively adjusted to reflect the two-for-one
stock splits declared December 7, 1999 and May 24, 2001.
OPTION/SAR EXERCISE AND HOLDINGS
The following table sets forth information relating to unexercised options
held as of April 28, 2001 by the executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2001
AND OPTION/SAR VALUES AT APRIL 28, 2001
Number of Unexercised Value of Unexercised
Shares Securities Underlying In-the Money
Acquired Options/SARs at 4/28/01(#)(1) Options/SARs at 4/28/01($)
on Value ----------------------------- ----------------------------
Name Exercise(#)(1) Realized($) Exercisable Un-exercisable Exercisable Un-exercisable
---- -------------- ----------- ----------- -------------- ----------- --------------
Dr. Aelred J. Kurtenbach 40,000 $175,320 78,400 131,600 $710,527 $908,653
James B. Morgan 0 0 159,200 80,800 1,558,993 552,758
Paul J. Weinand 128,800 918,338 8,640 10,560 81,711 87,744
Frank J. Kurtenbach 0 0 16,640 28,960 155,759 199,719
(1) The options have been retroactively adjusted to reflect the two-for-one
stock splits declared December 7, 1999 and May 24, 2001.
6
PERFORMANCE GRAPH
The following graph illustrates a comparison of cumulative total returns
for the Company vs. the NASDAQ Market Index and the Media General Industry Group
Index from April 26, 1996 to April 28, 2001. The graph assumes $100 invested
April 26, 1996 through April 28, 2001. No dividends were issued during that
time.
[PLOT POINTS CHART]
- ---------------------- ----------- ---------- ---------- ---------- ---------- ----------
04/26/96 05/02/97 05/01/98 04/30/99 04/29/00 04/28/01
- ---------------------- ----------- ---------- ---------- ---------- ---------- ----------
Daktronics, Inc. $100.00 $103.23 $209.68 $254.84 $467.74 $1202.63
- ---------------------- ----------- ---------- ---------- ---------- ---------- ----------
MG Group Index $100.00 $118.87 $169.19 $165.85 $364.76 $230.70
- ---------------------- ----------- ---------- ---------- ---------- ---------- ----------
NADSAQ Market Index $100.00 $106.59 $158.32 $209.07 $324.85 $181.39
- ---------------------- ----------- ---------- ---------- ---------- ---------- ----------
REPORT OF THE COMPENSATION COMMITTEE
CASH COMPENSATION
DETERMINATION OF BASE SALARY The Company's compensation philosophy is to
target executive salaries close to the median market rate paid for comparable
positions within the Midwest region for similar size companies. The Compensation
Committee reviewed base salaries for executive officers in November 2000.
Company fiscal 2000 performance was also considered. Based upon this review, the
Committee approved adjusting the base salary of Aelred Kurtenbach 20% and the
base salaries of the other executive officers an average of 10%. Salaries are
reviewed annually.
DETERMINATION OF BONUS For fiscal 2001, the Committee chose a formula based
performance bonus plan for the executive officers. The bonus consists of one
month's salary provided that after tax earnings exceed 14.5% of beginning
stockholders equity. The bonus increases yearly with performance improvement to
a maximum bonus of three month's salary at the point that after tax earnings
exceed 18.5% of beginning stockholders equity. For Fiscal 2001, the executive
officers earned the maximum bonus under the plan.
7
EQUITY BASED COMPENSATION
In November 1993, the Board of Directors of the Company adopted the
Daktronics, Inc. 1993 Stock Option Plan (the "Option Plan"), which was approved
by the shareholders in December 1993 and amended in August 1998. The Committee
determines awards under this plan for executive officers and approves awards for
other employees based upon the recommendation of the Company's executive
officers. In November 2000, the Committee awarded Aelred Kurtenbach an option to
purchase a total of 30,000 shares of Common Stock and allowed 220,000 shares to
be granted per Aelred Kurtenbach's discretion (adjusted for May 24, 2001
two-for-one split).
The exercise price per share of these options was established as the
average between the closing bid and asked price quotations for the Common Stock
as reported by the National Association of Securities Dealers Automatic
Quotation System (NASDAQ) on November 16, 2000, which was $7.65625 (adjusted for
May 24, 2001 two-for-one split). Subject to accelerated vesting upon "change in
control" of the Company as defined in the Option Plan, the outstanding options
generally vest 20% each year commencing November 16, 2001.
The Committee's basis for these awards was the Company's performance, as
measured in increased net sales and results of operations, over the last three
years and review of awards by comparable companies. The number of options
granted to the executive officers, including the Chief Executive Officer, was
less than the average of comparable companies for similar positions. The terms
of these options, including duration, vesting, and exercise price were similar
to that of comparable companies.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee determined the Chief Executive Officer's compensation in the
same manner described above for all executive officers of the Company. The
Committee recommended Dr. Kurtenbach's salary be increased 20% to $300,000,
commencing November 2000. Based upon the bonus plan described above, Dr.
Kurtenbach earned a bonus of $75,000 for fiscal 2001.The Committee awarded to
Dr. Kurtenbach options to purchase 30,000 shares of Company Stock at exercise
price of $8.421875 (adjusted for May 24, 2001 two-for-one split).
COMPENSATION COMMITTEE
Roland J. Jensen, Chair
Charles S. Roberts
Nancy D. Frame
8
REPORT OF THE AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised of three of
the Company's outside directors. The Board of Directors and the Audit Committee
believe that the Audit Committee's current member composition satisfies the rule
of the National Association of Securities Dealers, Inc. ("NASD") that governs
audit committees, including the requirement that audit committee members all be
independent directors.
In accordance with its written charter adopted by the Board of Directors
(set forth in Appendix A hereto), the Audit Committee assists the Board of
Directors with fulfilling its oversight responsibility regarding the practices,
quality and integrity of the accounting, auditing, and financial reporting
practices of the Company. In discharging its oversight responsibilities
regarding the audit process, the Audit Committee:
1. Reviewed and discussed the audited financial statements with
management;
2. Discussed with the independent auditors the material required to be
discussed by Statement on Auditing Standards No. 61; and
3. Reviewed the written disclosures and the letter from the independent
auditors required by the Independence Standards Board's Standard No.
1, and discussed with the independent auditors any relationships that
may impact their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended April 28, 2001 as filed with the Securities and Exchange
Commission.
AUDIT COMMITTEE
John L. Mulligan, Chair
James A. Vellenga
Duane E. Sander
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 28, 2001, regarding
the beneficial ownership of Common Stock of the Company by (i) each person or
group who is known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) all directors and nominees of the Company,
(iii) each individual named in the Summary Compensation Table and (iv) all
directors and executive officers of the Company as a group. The Company believes
that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole voting and investment power (or
share such powers with his or her spouse) with respect to the shares, subject to
the information contained in the notes to the table.
Name and Address Percent of
(if applicable) of Shares Outstanding
Beneficial Owner Beneficially Owned(1) Shares(1)
- ---------------- --------------------- -----------
Daktronics, Inc.
401(k) Retirement and Savings Plan (2) ..... 1,212,206 6.7%
James B. Morgan............................. 762,282( 3) 4.2%
John L. Mulligan............................ 53,000( 4) *
Dr. Duane E. Sander(5)...................... 800,400( 6) 4.4%
Dr. Aelred J. Kurtenbach(5)................. 1,478,400( 7) 8.2%
Charles S. Roberts, M.D..................... 158,524( 8) *
Frank J. Kurtenbach......................... 653,646( 9) 3.6%
Roland J. Jensen............................ 47,600(10) *
James A. Vellenga........................... 36,000(11) *
Paul J. Weinand............................. 153,474(12) *
Nancy D. Frame.............................. 14,000(13) *
All executive officers and directors
as a group (10 persons).............. 4,157,326 23.1%
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* Represents less than 1%
(1) For purposes of this table, a person or group of persons is deemed to
beneficially own shares issuable upon the exercise of options that are
currently exercisable or that become exercisable within sixty days after
the date hereof.
(2) The Common Stock held by the Daktronics, Inc. 401(k) Retirement and Savings
Plan and allocated to the plan participants are voted by the Trustee,
according to the instructions of the plan respective participants.
(3) Includes 159,200 shares issuable pursuant to currently exercisable stock
options and 18,162 shares held in the 401(k) plan.
(4) Includes 44,000 shares issuable pursuant to currently exercisable stock
options.
(5) Dr. Sander's and Dr. Kurtenbach's addresses are 331 32nd Avenue, Brookings,
South Dakota 57006.
(6) Includes (i) 36,000 shares issuable pursuant to currently exercisable stock
options, (ii) 352,040 shares owned by Dr. Sander's spouse and (iii) 50,160
shares owned by Dr. Sander's son.
(7) Includes (i) 78,400 shares issuable to Dr. Kurtenbach pursuant to currently
exercisable stock options, (ii) 55,440 shares held through the 401(k) plan,
and (iii) 755,480 shares owned by Dr. Kurtenbach's spouse.
(8) Includes 44,000 shares issuable pursuant to currently exercisable stock
options.
(9) Includes (i)16,640 shares issuable pursuant to currently exercisable stock
options and (ii) 14,884 shares held through the 401(k) plan.
(10) Includes 40,000 shares issuable pursuant to currently exercisable stock
options.
(11) Includes 28,000 shares issuable pursuant to currently exercisable stock
options.
(12) Includes (i) 8,640 shares issuable pursuant to currently exercisable stock
options and (ii) 8,036 shares held through the 401(k) plan.
(13) Includes 12,000 shares issuable pursuant to currently exercisable stock
options.
10
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
(SEC), and furnish copies of those reports to the Company. Based solely on a
review of the copies of such forms furnished to the Company, and written
representations from the executive officers and directors, the Company believes
that all Section 16(a) filing requirements were complied with during fiscal
2001.
PROPOSAL #2 - RATIFY APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, at the recommendation of the Audit Committee,
recommends that the shareholders ratify the appointment of the McGladrey &
Pullen, LLP, as independent auditors for the Company for the year ending April
27, 2002. McGladrey & Pullen, LLP served as independent auditors for the Company
for the year ended April 28, 2001. McGladrey & Pullen, LLP provided services in
connection with the audit of the financial statements of the Company for the
year ended April 28, 2001, assistance with the Company's Annual Report submitted
to the Securities and Exchange Commission on Form 10-K and quarterly reports
filed with the Securities and Exchange commission, and consultation on matters
relating to accounting and financial reporting. Representatives of McGladrey &
Pullen, LLP are not expected to be present at the Annual Meeting.
AUDIT FEES
The aggregate fees billed by McGladrey & Pullen, LLP for professional
services rendered for the audit of annual financial statements, for assistance
with Form 10-K, review of quarterly Forms 10-Q, attendance at Audit Committee
meetings and consultation on audit and accounting matters were approximately
$98,000 for the year ended April 28, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
McGladrey & Pullen, LLP or associated entities did not provide any services
to the Company for financial information systems design and implementation for
the fiscal year ended April 28, 2001.
ALL OTHER FEES
The aggregate fees billed by McGladrey & Pullen, LLP or associated entities
for all other non-audit services, including services in connection with the
Company's tax returns were $39,000 for the fiscal year ended April 28, 2001.
The Company's Audit Committee has considered whether provision of the above
non-audit services is compatible with maintaining the McGladrey & Pullen, LLP's
independence and has determined that such services are compatible with
maintaining McGladrey & Pullen, LLP's independence.
PROPOSAL #3 - APPROVE AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION INCREASING THE NUMER OF AUTHORIZED SHARES OF COMMON STOCK
The Company proposes to amend its Amended and Restated Articles of
Incorporation, to increase the aggregate number of authorized shares of Common
Stock of the Company from 30,000,000 to 60,000,000 shares which will continue to
include 5,000,000 shares of undesignated stock. The Company expects to continue
to use its Common Stock for purposes of raising capital to support its
operations and granting options to employees and directors who contribute to the
success of the Company, including the shares in the proposed 2001 Stock Option
Plan described in Proposal # 4 and the 2001 Outside Directors Stock Option Plan
described in Proposal #5.
11
Although the Company has no present plans, agreements or understandings
regarding the issuance of the proposed additional shares, the Board of Directors
recommends adoption of the amendment because the Company will have greater
flexibility in connection with possible future financing transactions,
acquisitions of other companies or business properties, stock dividends or
splits, employee benefit plans and other proper corporate matters. Moreover,
having such additional authorized shares available will give the Company the
ability to issue shares without the expense and delay of a special meeting of
shareholders. Such a delay might deprive the Company of the flexibility the
Board views as important in facilitating the effective use of the shares of
Common Stock. Except as otherwise required by applicable law, authorized but
un-issued shares of Common Stock may be issued at such times, for such purposes
and for such consideration as the Board of Directors may determine to be
appropriate, without further authorization by shareholders.
Since the issuance of additional shares of Common Stock, other than on a pro
rata basis to all current shareholders, would dilute the ownership interest of a
person seeking to obtain control of the Company, such issuance could be used to
discourage a change in control of the Company by making it more difficult or
costly. The Company is not aware of anyone seeking to accumulate Common Stock to
obtain control of the Company and has no present intention to use the additional
authorized shares to deter a change in control.
The Board of Directors unanimously recommends a vote FOR the proposal to approve
the amendment to the Company's Restated Articles of Incorporation increasing the
number of shares of the Company's authorized Common Stock from 30,000,000 shares
to 60,000,000 shares. Approval requires a vote in favor of the amendment by the
holders of a majority of the Company's outstanding shares of common stock.
PROPOSAL #4 - APPROVE 2001 STOCK OPTION PLAN
In November 1993, the Board of Directors adopted the Daktronics, Inc. 1993 Stock
Option Plan, which was approved by the Company's shareholders in December 1993
and amended in 1998. That plan was approved for ten years. The Board of
Directors has now approved a new plan, which includes 1,200,000 shares and will
expire at the end of the fiscal year 2011.
SUMMARY OF THE PLAN
Purpose The purpose of the Option Plan is to provide incentives to officers, key
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employees of the Company and its subsidiaries and other persons who contribute
and are expected to contribute materially to the success of the Company. The
Option Plan provides a means of rewarding performance and to enhance the
interest of such persons in the company's continued success and progress by
providing them a proprietary interest in the Company.
Administration The Compensation Committee of the Board of Directors is
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responsible for administration of the Option Plan. The Board of Directors has
general authority and discretion to determine the persons to whom options will
be granted, the exercise price, the time or times at which the options may be
exercised, and the number of shares to be subject to each option. In addition,
the Board may prescribe he terms applicable to each grant of an option.
Incentive Only incentive stock options (ISOs) within the meaning of Section 422
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of the Internal Revenue Code of 1986, as amended (the "Code"), may be granted
under the Option Plan. Options may be granted only to key employees of the
Company and its subsidiaries and other persons who have contributed and are
expected to contribute materially to the success of the Company and its
subsidiaries.
Price The exercise price of shares of Common Stock subject to options granted
- -----
under the Option Plan is determined by the Board of Directors, and shall not be
less than 100% of the fair market value of the Company's Common Stock on the
date the option is granted. An option granted under the Option Plan vests at
such rate and upon such conditions as the Board may determine at the time the
option is granted.
12
Transfer No option granted under the Option Plan is transferable by the optionee
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during his or her lifetime. Upon the death of disability of an optionee, the
optionee or his or her legal or personal representative or beneficiaries may
exercise an option to the extent exercisable by the optionee within ninety days
after the optionee's death or disability (but not later than the expiration of
the term of the option). In the event any option expires or is canceled,
surrendered or terminated without being exercised, the shares subject to such
option (or the unexercised portion thereof) will again be available for grant
under the Option Plan.
Payment Payment for the shares of Common Stock purchased upon the exercise of
- -------
options under the Option Plan must be made in full at the time the option is
exercised. The Board of Directors, at its discretion, may permit payment to be
made by the optionee's broker from the sale or loan proceeds for such shares or
any other securities the optionee may have in his or her account with the
broker.
Amendment The Option Plan may be amended by the Board of Directors, except that
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without the affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present and entitled to vote at a meeting at which a
quorum is present, the Board of Directors, may not amend the Options Plan to:
(i) increase the aggregate number of shares of Common Stock which may be issued
and sold under the Option Plan (except such number of shares may be adjusted in
the event of a recapitalization, stock dividend or similar event), (ii) change
the manner of determining the option price, (iii) extend the period during which
the options may be granted, or (iv) change the requirements as to the person
eligible to receive options.
Tax Consequences Under the present federal tax regulations:
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1. There will be no federal income tax consequences to either the Company or
the optionee upon the grant of an ISO, nor will an optionee's exercise of
an ISO result in federal income tax consequences to the Company.
2. Although an optionee will not realize ordinary income upon his or her
exercise of an ISO, the excess of the fair market value of the shares of
Common Stock acquired at the time of exercise over the exercise price will
constitute an "item of tax preference" within the meaning of Section 57 of
the Code and thus, may result in the imposition of the "alternative minimum
tax" pursuant to Section 55 of the Code on the optionee.
3. If an optionee does not dispose of the shares of Common Stock acquired
through the exercise of an ISO within two years from the date of the date
of the grant and within one year of the exercise of the ISO, any gain
realized upon a subsequent disposition of such shares will constitute a
long-term capital gain to the optionee at the capital gain rate, the
capital gain rate is reduced if the shares are held for 18 months from the
date of exercise. If an optionee disposes of such shares within two years
from the date of the grant or within one year of the date of exercise of
the ISO, an amount equal to the lesser of (i) the excess of the fair market
value of such shares on the date of the exercise over the exercise price,
or (ii) the actual gain realized upon such disposition will constitute
ordinary income to the optionee in the year of the disposition.
4. If such disposition is due to the death of the optionee, the ordinary
income treatment will not apply. Any additional gain upon such disposition
will be taxed as short-term capital gain. The Company will receive a
deduction in an amount equal to the amount constituting ordinary income to
the optionee.
RECOMMENDATION
The Board of Directors unanimously recommends a vote FOR the proposal to approve
the Daktronics, Inc. 2001 Stock Option Plan.
PROPOSAL #5 - APPROVE 2001 OUTSIDE DIRECTOR STOCK OPTION PLAN
In November 1993, the Board of Directors adopted the Daktronics, Inc. 1993
Outside Director Stock Option Plan, which was approved by the Company's
shareholders in December 1993 and amended in 1998. That plan was approved for
ten years. The Board of Directors has now approved a new plan, which includes
400,000 shares and will begin August 15, 2001 and expire at the end of the
fiscal year 2011.
13
SUMMARY OF THE PLAN
Purpose The purpose of the Director Option Plan is to (i) provide a portion of
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the compensation to non-employee directors serving on the Company's Board of
Directors in the form of options to acquire the Company's Common Stock, (ii)
provide a means of attracting and retaining experienced non-employee directors,
and (ii) enhance the interest of non-employee directors in the Company's
continued success and progress by providing them a proprietary interest in the
Company.
Eligibility The Director Option Plan provides for the granting of stock options
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to members of the Company's Board of Directors who are not and have not been
full-time employees of the Company or any of is subsidiaries (the "Non-Employee
Directors"). The following directors of the Company are the Non-Employee
Directors: Roland J. Jensen, John L. Mulligan, Charles S. Roberts, Duane E.
Sander, Nancy Frame, and James A. Vellenga.
Plan Under the terms of the amended 1993 Director Option Plan, each Non-Employee
- ----
Director is granted options to purchase 3,000 shares of the Common Stock for
each year the Director was elected to serve. This amount changed to 6,000
options for each year the Director was elected to serve with the two-for-one
stock split December 7, 1999 and to 12,000 options for each year the Director
was elected to serve with the two-for-one stock split May 24, 2001. Under the
terms of the proposed 2001 Director Option Plan, each Director would receive up
to 12,000 options for each year the Director was elected to serve. An aggregate
of 400,000 shares of the Company's Common Stock is reserved for issuance upon
exercise of options granted under the 2001 Director Option Plan.
Administration A committee consisting of the Chief Executive Officer and the
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Chief Financial Officer is responsible for the administration of the Director
Option Plan. The Board of Directors has authorization to interpret the Director
Option Plan, but not to make grants under the Director Option Plan. The grant of
stock options is prescribed by the Director Option Plan.
Price The exercise price of shares of Common Stock subject to options granted
- -----
under the Director Option Plan is the fair market value of the Company's Common
Stock on the date the option is granted. An option granted under the Director
Option Plan vests at the time the option is granted, but may not be exercised
until one year after the date of grant. The term of options granted under the
Director Option Plan expires seven years after the date of grant.
Transfer No option granted under the Director Option Plan is transferable by the
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optionee during his or her lifetime. In the event any option expires or is
canceled, surrendered or terminated without being exercised, the shares subject
to such option (or the unexercised portion thereof) will again be available for
grant under the Option Plan.
Payment Payment for the shares of Common Stock purchased upon the exercise of
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options under the Option Plan must be made in full at the time the option is
exercised.
Amendment The Director Option Plan may be amended by the Board of Directors,
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(but not more than every six months, unless the amendment is intended to conform
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act, or the rules thereunder), except that the Board of Directors may
not amend the Director Options Plan to decrease the exercise price for shares
subject to options granted under the Director Option Plan (except that the
number of shares may be adjusted in the event of a recapitalization, stock
dividend or similar event).
Tax Consequences Under the present federal tax regulations, there will be no
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federal income tax consequences to either the Company or the optionee upon the
grant of an option under the Director Option Plan. Upon exercise of such option,
the optionee will realize ordinary income in an amount equal to the excess of
the fair market value of the shares of Common Stock acquired over the exercise
price, and the Company will receive a corresponding tax deduction. The gain, if
any, realized upon a subsequent disposition of such shares will constitute
short-term or long-term capital gain depending upon the optionee's holding
period.
14
RECOMMENDATION
The Board of Directors unanimously recommends a vote FOR the proposal to approve
the Daktronics, Inc. 2001 Outside Director Stock Option Plan.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters that may
come before the meeting. However, if any matters other than those referred to
above should properly come before the meeting calling for a vote of the
shareholders, it is the intention of the persons named in the enclosed proxy to
vote such proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the 2001 Annual Meeting
must be received at the Company's principal executive offices, 331 32nd Avenue,
Brookings, South Dakota 57006, addressed to the Secretary of the Company, not
later than March 20, 2002.
BY ORDER OF THE BOARD OF DIRECTORS,
Duane E. Sander, Secretary
Dated: July 13, 2001
15
APPENDIX A: CHARTER OF THE AUDIT COMMITTEE
Organization There shall be a committee of the board of directors to be known as
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the audit committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy The audit committee shall provide assistance to the
- -------------------
corporate directors in fulfilling their responsibility to the shareholders,
potential shareholders, and investment community relating to corporate
accounting, reporting practices of the corporation, and the quality and
integrity of the financial reports of the corporation. In so doing, it is the
responsibility of the audit committee to maintain free and open means of
communication between the directors, the independent auditors, and the financial
management of the corporation.
Responsibilities In carrying out its responsibilities, the audit committee
- ----------------
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and to ensure to the directors and shareholders
that the corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
1. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
2. Meet with independent auditors and financial management of the corporation
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized, and at the conclusion thereof review such
audit, including any comments or recommendations of the independent
auditors.
3. Review with the independent auditors, and financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the corporation, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of such internal controls to
expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper. Further, the committee periodically should
review Company policy statements to determine their adherence to the code
of conduct.
4. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any changes
in accounting principles should be reviewed.
5. Provide sufficient opportunity for the independent auditors to meet with
the members of the audit committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the corporation's financial, accounting, and
auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.
6. Review accounting and financial human resources and succession planning
within the Company.
7. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
8. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
16
APPENDIX B: 2001 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the 2001 Incentive Stock Option Plan is to
induce certain designated persons to continue to provide valuable services to
Daktronics, Inc. (the "Company") and to encourage such persons to secure or
increase on reasonable terms their stock ownership in the Company. The Board of
Directors of the Company believes the Plan is in the best interest of the
Company and will promote the success of the Company. This success will be
achieved by encouraging continuity of management and increased incentive and
personal interest in the welfare of the Company by those who are primarily
responsible for shaping and implementing the long-range plans of the Company.
Certain Options granted under this Plan are intended to be Incentive
Stock Options qualified under Section 422 of the Code.
2. Definitions. For purposes of this Plan, the following terms shall
have the meanings indicated below:
(a) "Capital Stock" or "Common Stock": any of the Company's
authorized but unissued shares of common stock, each without par value.
(b) "Code": the Internal Revenue Code of 1986, as amended from
time to time.
(c) "Fair Market Value": (i) the average between the high and
low reported sale prices for the Common Stock on the Option Date (or,
if there were no such sales on that date, on the next most recent date
on which there were such sales) as reported on the Composite Tape if
the Common Stock is listed on the New York Stock Exchange ("NYSE") or
on the National Association of Securities Dealers National Market
System ("NMS"), (ii) if the Common Stock is not then listed on the NYSE
or the NMS, the average between the closing bid and asked price
quotations for the Common Stock on that date (or if none on that date,
on the next most recent date on which there were such quotations) as
reported by the National Association of Securities Dealers Automatic
Quotation System or any successor thereto or (iii) if the Common Stock
is not then listed as described above, such value as is reasonably
determined by the Committee (see Section 4) based on the then current
fair market value of the Common Stock at the time any Option is
granted. Fair Market Value of Incentive Stock Options shall be
determined consistent with the Code and regulations.
(d) "Incentive Stock Option": an option defined in Section 422
of the Code to purchase shares of the common stock of the Company.
(e) "Non-Qualified Stock Option": an option, not intended to
qualify as an Incentive Stock Option as defined in Section 422 of the
Code, to purchase Common Stock of the Company.
(f) "Option": the term shall refer to a Stock Option granted
under this Plan.
(g) "Option Agreement": a written agreement pursuant to which
the Company grants an Option to an Optionee and sets the terms and
conditions of the Option.
(h) "Option Date": the date upon which an Option Agreement for
an option granted pursuant to this Plan is duly executed by or on
behalf of the Company.
(i) "Option Stock": the Common Stock of the Company (subject
to adjustment as described in Section 7) reserved for options pursuant
to this Plan, or any other class of stock of the Company which may be
substituted therefore by exchange, stock split or otherwise.
(j) "Optionee": a person who is eligible to receive an Option
under Section 5 of the Plan and to whom an Option has been granted
under the Plan.
(k) "Plan": this 2001 Stock Option Plan effective August 15,
2001, and as amended hereafter from time to time.
(l) A "Subsidiary": any corporation in an unbroken chain of
corporations beginning with the Company, if, at the time of granting
the option, each of the corporations other than the last corporation in
the chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. The term shall include any subsidiaries
which become such after adoption of this Plan.
3. Options Available Under Plan. An aggregate of 1,200,000 shares of
the Company's authorized but unissued shares of Common Stock are hereby made
available for grant, and shall be reserved for issuance, under this Plan. The
aggregate number of shares available under this Plan shall be subject to
adjustment on the occurrence of any of the events and in the manner set forth in
Section 7. If an Option shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares, shall
(unless the Plan shall have been terminated) become available for other Options
under the Plan.
4. Administration. The Plan shall be administered by the Board of
Directors of the Company. At all times subject to the authority of the Board of
Directors, the Board of Directors may from time to time delegate some or all of
its authority under the Plan to a committee consisting of three (3) or more
Directors (the "Committee"), and/or obtain assistance or recommendations from
such Committee. If no separate committee is appointed, the Board shall
constitute the Committee, and references to the Committee shall include the
entire Board of Directors.
The Company shall grant Options pursuant to the Plan upon
determinations of the Committee as to which of the eligible persons shall be
granted Options, the number of shares to be Optioned and the term during which
any such Options may be exercised. At all times, a majority of the members of
the Committee making determinations about the grant of Options to
employee-directors or employee-officers must be disinterested in the grant being
made. The Committee may from time to time adopt rules and procedures for
carrying out the Plan and interpretations and constructions of any provision of
the Plan, which shall be final and conclusive.
5. Eligibility for Stock Options. Incentive Stock Options under the
Plan may only be granted to such employees of the Company or any Subsidiary
thereof, as selected by the Committee.
In selecting the employees or other persons to whom Stock Options shall
be granted, as well as determining the number of shares subject to each Option,
the Committee shall take into consideration such factors as it deems relevant in
connection with accomplishing the purpose of the Plan. For any calendar year,
the aggregate Fair Market Value (determined at the Option Date) of the stock
with respect to which any Incentive Stock Options are exercisable for the first
time by any individual employee (under all Incentive Stock Option plans of the
Company and all subsidiary corporations) shall not exceed $100,000. Subject to
the provisions of Section 3, an optionee who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options if
the Committee shall so determine. Any Incentive Stock Option that becomes
exercisable and exceeds the above limitation shall be treated as a Non-Qualified
Option.
No Stock Option may be granted under this Plan later than the
expiration of the end of the fiscal year 2011.
6. Terms and Conditions of Options. Whenever the Committee shall
designate an Optionee, it shall communicate to the Secretary of the Company the
name of the Optionee, the number of shares to be Optioned and such other terms
and conditions as it shall determine, not inconsistent with the provisions of
this Plan. The President or other officer of the Company shall then enter into
an Option Agreement with the Optionee, complying with and subject to the
following terms and conditions and setting forth such other terms and conditions
of the Option as determined by the Committee:
(a) Number of shares and option price. The Option Agreement
shall state the total number of shares to which it pertains. The price
of Incentive Stock Option Stock shall be not less than one hundred
percent (100%) of the Fair Market Value of the Option Stock at the
Option Date. In the event an Incentive Stock Option is granted to an
employee, who, at the Option Date, owns more than ten percent (10%) of
the voting power of all classes of the Company's stock then
outstanding, the price of the shares of Option Stock which will be
covered by such Option shall be not less than one hundred ten percent
(110%) of the Fair Market Value of the Option Stock at the Option Date.
Non-Qualified Options may be granted at a price equal to, greater than
or less than Fair Market Value at the date of grant. The Option price
shall be subject to adjustment as provided in Section 7 hereof.
(b) Period of options and right to exercise. Options granted
under this Plan shall be subject to such terms and conditions, shall be
exercisable at such times and shall be evidenced by such form of
written Option Agreement as the Committee shall determine, provided
that such determinations are not inconsistent with Code Section 422 and
the regulations thereunder. The Option Agreement may, at the discretion
of the Committee, provide for the acceleration of vesting of Options
upon a "Change in Control" of the Company, as defined in Section 6(h)
below.
2
In addition, no Option granted, shall by its terms, be exercisable
after the expiration of ten (10) years from the date such Option is
granted. Except, however, Incentive Stock Options granted to any
employee who at the Option Date owns more than ten percent (10%) of the
voting power of all shares of the classes of Company's stock then
outstanding, may not be exercisable after expiration of five (5) years
from the Option Date. The period during which the Option may be
exercised, once it is granted, shall not be reduced, except as provided
in paragraphs (c), (d) and (e) below. The exercise of any Option will
be contingent upon receipt by the Company of payment as provided in
paragraph (f) below for the full purchase price of such shares. No
Optionee or his or her legal representatives, legatees or distributees,
as the case may be, will be, or will be deemed to be, a holder of any
shares subject to an Option unless and until certificates for such
shares are issued under the terms of the Plan.
(c) Termination of Employment or Service. In the event that an
Optionee shall cease to be employed by or performing services for the
Company for any reason other than death, subject to the condition that
no Incentive Stock Option shall be exercisable after the expiration of
ten (10) years from the date it is granted, and unless the Option
Agreement provides otherwise, such Optionee shall have the right to
exercise any outstanding Options at any time within three (3) months
after the termination of employment or service.
(d) Death of Optionee. If the Optionee shall die (i) while in
the employ of or while providing services to the Company or any
Subsidiary, or (ii) within a period of three (3) months after the
termination of his or her employment or as a corporate director with
the Company or any subsidiary as provided in paragraph (c) of this
section, and in either case shall not have fully exercised his or her
Options, any Options granted pursuant to the Plan shall be exercisable
until the earlier of the originally stated date of termination or one
year from the date of death. Such Option shall be exercised pursuant to
subparagraph (f) of this Section by the person or persons to whom the
Optionee's rights under the Option shall pass by the Optionee's will or
by the laws of descent and distribution, and only to the extent that
such Options were exercisable at the time of his or her death.
(e) Transfer of Option. Each Option granted hereunder shall,
by its terms, not be transferable by the Optionee other than by will or
by the laws of descent and distribution, and shall be, during the
Optionee's lifetime, exercisable only by the Optionee. Except as
permitted by the preceding sentence, each Option granted under the Plan
and the rights and privileges thereby conferred shall not be
transferred, assigned or pledged in any way (whether by operation of
law or otherwise), and shall not be subject to execution, attachment or
similar process. Upon any attempt to so transfer, assign, pledge, or
otherwise dispose of the Option, or of any right or privilege conferred
thereby, contrary to the provisions of the Option or the Plan, or upon
levy of any attachment or similar process upon such rights and
privileges, the Option, and such rights and privileges, shall
immediately become null and void.
(f) Manner of Exercise of Options. An Option may be exercised,
in whole or in part, at such time or times and with respect to such
number of shares, as the Board of Directors, in its sole discretion,
shall determine at the time that the Option is granted. The Option
terms shall be set forth in the Option Agreement granting the Option.
Such Option shall be exercisable only within the Option period and only
by (i) written notice to the Company of intent to exercise the Option
with respect to a specified number of shares of stock; (ii) tendering
the original Option Agreement to the Company; and (iii) payment to the
Company of the amount of the Option purchase price for the number of
shares of stock with respect to which the Option is then exercised.
Payment of the Option purchase price may be made in cash, by cashier's
check (by personal check at the discretion of the Company) or by a
"cashless exercise" procedure established between the Company and a
stock brokerage firm, subject to compliance with applicable securities
laws. When shares of stock are issued to the Optionee pursuant to the
exercise of an Option, the fact of such issuance shall be noted on the
Option Agreement by the Company before the Agreement is returned to the
Optionee. When all shares of Optioned stock covered by the Option
Agreement have been issued to the Optionee, or the Option shall expire,
the Option Agreement shall be canceled and retained by the Company.
3
(g) Delivery of Certificate. As promptly as practicable after
receipt of the written notice and payment specified above, the Company
shall deliver to the Optionee certificates for the number of shares
with respect to which the Option has been exercised, issued in the
Optionee's name; provided, however, that such delivery shall be deemed
effected for all purposes when the Company, or the stock transfer agent
for the Company, shall have deposited such certificates in the United
States mail, postage prepaid, addressed to the Optionee at the address
specified in the written notice of exercise.
(h) Change in Control. A "Change in Control" shall, unless the
Board otherwise directs by resolution adopted prior thereto, be deemed
to occur if (i) any "person" (as that term is used in Sections 13 and
14(d)(2) of the Securities Exchange Act of 1934 as amended ("Exchange
Act")) is or becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or indirectly, of 50% or
more of the voting Capital Stock of the Company ("Voting Stock") or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election or the
nomination for election by the Company's shareholders of each new
director was approved by a vote of at least three-quarters of the
directors then still in office who were directors at the beginning of
the period. Any merger, consolidation or corporate reorganization in
which the owners of the Company's capital stock entitled to vote in the
election of directors prior to said combination, own 50% or more of the
resulting entity's Voting Stock shall not, by itself, be considered a
change in control for the purposes of this Plan.
(i) Other Provisions. The Option Agreements authorized under
this Section may contain such other provisions as the Committee shall
deem advisable.
7. Adjustment of Number of Shares. If, and to the extent that, the
number of issued shares of the Capital Stock of the Company shall be increased
or reduced by change in par value, recapitalization, reorganization, merger,
consolidation, split up, distribution of a dividend payable in stock or the
like, the number of shares subject to the Option and the Option price therefor
shall be equitably adjusted by the Committee consistent with such change to
prevent substantial dilution or enlargement of the rights granted to or
available to Optionees.
Subject to the foregoing, the grant of an Option pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.
8. No Rights as Stockholder. An Optionee shall not, by reason of any
Option granted hereunder, have any right of a stockholder of the Company with
respect to the shares covered by his or her Option until such shares shall have
been issued to the Optionee.
9. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option. Neither shall
the Plan confer upon the Optionee any rights respecting continued employment nor
limit the Optionee's rights or the employer Company's rights to terminate such
employment.
10. Withholding Taxes. If required by law, upon a disqualified
disposition of an Incentive Stock Option, the Company shall have the right to
require any Optionee that is or was an employee as of the Option Date, to remit
to the Company an amount sufficient to satisfy any federal and state withholding
or other employment taxes, if any, resulting from such option exercise or early
disposition of Option Stock. Payment of such amount may be made in the same
manner as payment of the exercise price or by tendering previously owned shares
of the Company's Common Stock with a Fair Market Value on the date of exercise
equal to such amount, subject to compliance with applicable securities laws.
11. Common Stock Acquired for Investment. Common Stock acquired by an
Optionee under this Plan by exercise of any Option shall be acquired by the
Optionee for investment and without intention of resale, unless, in the opinion
of counsel of the Company, such common stock may be purchased without any
investment
4
representation. Where an investment representation is deemed necessary, the
Committee may require a written representation to that effect by the Optionee as
a condition of the Optionee exercising an Option under this Plan, and the
Committee may place an appropriate legend on the common stock issued to the
Optionee indicating that such common stock has not been registered under federal
or state securities laws. Each Option shall be subject to the requirement that
if, at any time, the Committee shall determine in its discretion that the
listing, registration or qualification of the shares subject to such Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Option or the issuance
or purchase of shares thereunder, then such Option shall not be granted or
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee. Nothing contained herein shall require the
Company to register the Options or the shares of voting common stock purchased
upon the exercise of said Options.
12. Effective Date. This Plan shall be effective August 15, 2001 (the
"Effective Date") as approved by the Board of Directors, subject to approval by
the shareholders of the Company. However, unless within 12 months after the Plan
is adopted by the Board of Directors, the Plan is approved by the vote of the
holders of a majority of the outstanding Capital Stock of the Company, the Plan
and options granted hereunder shall not qualify under Section 422 of the Code.
13. Liquidation. Upon the complete liquidation of the Company, any
unexercised Options theretofore granted under this Plan shall be deemed
canceled, except as otherwise provided in Section 7 in connection with a merger,
consolidation or reorganization of the Company.
14. Termination and Amendment of the Plan. This Plan shall terminate at
the end of the fiscal year 2011 or at such earlier time as the Board of
Directors shall determine. Any termination shall not affect any Options then
outstanding under the Plan.
The Board may make such modifications of the Plan as it shall deem
advisable, but may not, without further approval of the stockholders of the
Company, except as provided in Section 7 hereof, (a) increase the number of
shares reserved for Options under this Plan, (b) change the manner of
determining the Option price for Incentive Stock Options, (c) increase the
maximum term of the Options provided for herein or (d) change the class of
persons eligible to receive Options under the Plan.
15. Governing law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of South Dakota without reference
to the principles of conflicts of law thereof.
5
APPENDIX C: 2001 OUTSIDE DIRECTORS STOCK OPTION PLAN
1. Purpose
The purpose of the Daktronics, Inc. 2001 Outside Directors Stock Option
Plan (the "Plan") is to provide a means whereby Daktronics, Inc. (the "Company")
may grant options to purchase common stock of the Company to those members of
the Company's Board of Directors who are not employees of the Company or any of
its subsidiaries ("Eligible Directors"). Options granted under the Plan are not
intended to and do not qualify as incentive stock options as described in
Section 422A of the Internal Revenue Code (the "Code").
2. Number of Shares Available under the Plan
Options will be granted by the Company at the times described below, to
Eligible Directors to purchase an aggregate of up to 400,000 shares of common
stock, without par value, of the Company and 400,000 shares shall be reserved
for options granted under the Plan (subject to adjustment as provided in Section
4.9 below). The shares issued upon exercise of options granted under the Plan
may be authorized and unissued shares or reacquired shares held by the Company.
If any option granted under the Plan shall terminate, expire or with the consent
of the optionee, be canceled as to any shares, new options may thereafter be
granted covering such shares without affecting the amount of the option reserve
noted above.
3. Administration.
The Plan shall be administered by a Committee consisting of the
President and Chief Financial Officer of the Company who are not eligible to
participate in the Plan (the "Committee"). Committee members shall have no
discretion concerning the grant of options, the price at which options are to be
granted or times at which options may be exercised.
The Committee may interpret the Plan, amend and rescind any rules and
regulations necessary or appropriate for the administration of the Plan and make
other determinations and take such other action as it deems necessary or
advisable. No such action will affect the rights of Eligible Directors who have
been granted options prior to such action. Any interpretation or other action
made or taken by the Committee shall be final, binding and conclusive.
4. Terms and Conditions
4.1 Time of Grant and Form. Each option granted under the Plan shall be
evidenced by an option agreement which shall be subject to the terms and
conditions of the Plan, for the following respective grants of options:
(a) Each Eligible Director who is appointed, elected or re-elected
to the Board of Directors on or after August 15, 2001, shall
receive a grant of options for the purchase of shares of
common stock of the Company, effective on the date of
appointment, election or re-election to the Board in an amount
equal to a maximum of 12,000 options for each year of the term
of that person's directorship (i.e., up to 12,000 options for
a one year term, or lesser period; up to 24,000 options for a
two year term, or lesser period exceeding one year; or up to
36,000 options for a three year term, or lesser period
exceeding two years).
The foregoing respective dates of grant are referred to herein as the "Grant
Date." Notwithstanding the foregoing, if on the scheduled Grant Date, the
President determines, in his discretion, that the Company is in possession of
material, undisclosed information that would prevent the Company from issuing
securities, then the grant of options to Eligible Directors pursuant to this
Section 4.1 will be suspended until the third day after public dissemination of
such information. The President may only suspend the grant; the amount and other
terms of the grant will remain as set forth in the Plan, with the exercise price
of the option to be determined in accordance with the Plan on the date the
option is finally granted.
6
4.2 Exercisability. Subject to Sections 4.6 and 4.7 below, each option
agreement shall provide that the option will vest and become first exercisable
annually in increments of up to 12,000 shares of Common Stock commencing on the
first anniversary of the grant date. If the Plan is not approved by the
shareholders, all options granted under the Plan shall thereupon lapse.
4.3 Option Period. Subject to Sections 4.6 and 4.7 below, each option
agreement shall provide that the option shall expire at the end of seven (7)
years from the date granted or upon dissolution of the Company, if earlier.
4.4 Option Price. The exercise price per share for options granted
under the Plan shall be the "Fair Market Value" (as defined herein) as of the
Common Stock on the Grant Date. As used herein, "Fair Market Value" shall mean:
(a) the average between the high and low reported sale prices for the Common
Stock on the date of determination (or, if there were no such sales on that
date, on the next most recent date on which there were such sales) as reported
on the Composite Tape if the Common Stock is listed on the New York Stock
Exchange ("NYSE") or on the National Association of Securities Dealers National
Market System ("NMS"), (b) if the Common Stock is not then listed on the NYSE or
the NMS, the average between the closing bid and asked price quotations for the
Common Stock on that date (or if none on that date, on the next most recent date
on which there were such quotations) as reported by the National Association of
Securities Dealers Automatic Quotation System or any successor thereto or (c) if
the Common Stock is not then listed as described above, such value as is
reasonably determined by the Committee based on the then current fair market
value of the Common Stock.
4.5 Payment of Option Price. The purchase price of the shares as to
which an option shall be exercised shall be paid in cash, check, bank draft or
money order made payable to the Company, or by a "cashless exercise" procedure
established between the Company and a stock brokerage firm, subject to
compliance with applicable securities laws.
4.6 Exercise in the Event of Death or Ceasing to be a Board Member.
Each option agreement shall be subject to the following:
(a) If an optionee ceases to be a director of the Company (other
than by death or a "Change in Control" (as defined herein)),
the options which are then exercisable (vested) may be
exercised until seven (7) years from the date of grant, and
shall thereafter lapse.
(b) If an optionee ceases to be a director of the Company because
of death or a "Change in Control," all outstanding options,
whether or not vested, shall immediately become exercisable
until seven (7) years from the date of grant, and shall
thereafter lapse.
Options that are not exercisable (not vested) as of the date an optionee ceases
to be a director of the Company (other than by death or due to a Change in
Control) shall immediately lapse on that date.
4.7 Change in Control. A "Change in Control" shall, unless the Board
otherwise directs by resolution adopted prior thereto, be deemed to occur if (i)
any "person" (as that term is used in Sections 13 and 14(d)(2) of the Securities
Exchange Act of 1934 as amended ("Exchange Act")) is or becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 50% or more of the voting capital stock of the Company ("Voting
Stock") or (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for election by the Company's shareholders of each new director was approved by
a vote of at least three-quarters of the directors then still in office who were
directors at the beginning of the period. Any merger, consolidation or corporate
reorganization in which the owners of the Company's capital stock entitled to
vote in the election of directors prior to said combination, own 50% or more of
the resulting entity's Voting Stock shall not, by itself, be considered a change
in control for the purposes of this Plan.
7
4.8 Adjustment of Number of Shares. If, and to the extent that, the
number of issued shares of the Capital Stock of the Company shall be increased
or reduced by change in par value, recapitalization, reorganization, merger,
consolidation, split up, distribution of a dividend payable in stock or the
like, the number of shares subject to any outstanding option and the option
price therefor shall be equitably adjusted by the Committee consistent with such
change to prevent substantial dilution or enlargement of the rights granted to
or available to optionees.
Subject to the foregoing, the grant of an option pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.
4.9 No Rights as Stockholder. An optionee shall not, by reason of any
option granted hereunder, have any right of a stockholder of the Company with
respect to the shares covered by his or her option until such shares shall have
been issued to the optionee.
4.10 No Obligation to Exercise Option. The granting of an option shall
impose no obligation upon the optionee to exercise such option. Neither shall
the Plan confer upon the optionee any rights respecting continued directorship.
4.11 Withholding Taxes. Prior to the delivery of any certificates or
certificates for shares issuable upon exercise of an option, the Company shall
have the right to require any optionee to remit to the Company an amount
sufficient to satisfy any federal and state withholding or other taxes, if any,
resulting from such option exercise. Payment of such amount may be made in the
same manner as payment of the exercise price or by tendering previously owned
shares of the Company's Common Stock with a Fair Market Value (as defined
herein) on the date of exercise equal to such amount, subject to compliance with
applicable securities laws.
4.12 Common Stock Acquired for Investment. Common Stock acquired by an
optionee under this Plan by exercise of any option shall be acquired by the
optionee for investment and without intention of resale, unless, in the opinion
of counsel of the Company, such common stock may be purchased without any
investment representation. Where an investment representation is deemed
necessary, the Committee may require a written representation to that effect by
the optionee as a condition of the optionee exercising an option under this
Plan, and the Committee may place an appropriate legend on the common stock
issued to the optionee indicating that such common stock has not been registered
under federal or state securities laws. Each option shall be subject to the
requirement that if, at any time, the Committee shall determine in its
discretion that the listing, registration or qualification of the shares subject
to such option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such option
or the issuance or purchase of shares thereunder, then such option shall not be
granted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. Nothing contained herein shall
require the Company to register the options or the shares of voting common stock
purchased upon the exercise of said options.
4.13 Liquidation. Upon the complete liquidation of the Company, any
unexercised options theretofore granted under this Plan shall be deemed
canceled, except as otherwise provided in the Plan in connection with a merger,
consolidation or reorganization of the Company.
4.14 Transfer of Option. Each option granted hereunder shall, by its
terms, not be transferable by the optionee other than by will or by the laws of
descent and distribution, and shall be, during the optionee's lifetime,
exercisable only by the optionee. Except as permitted by the preceding sentence,
each option granted under the Plan and the rights and privileges thereby
conferred shall not be transferred, assigned or pledged in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to so transfer, assign, pledge,
or otherwise dispose of the option, or of any right or privilege conferred
thereby, contrary to the provisions of the option or the Plan, or upon levy of
any attachment or similar
8
process upon such rights and privileges, the option, and such rights and
privileges, shall immediately become null and void.
4.15 Governing law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of South Dakota without reference
to the principles of conflicts of law thereof.
4.16 Expiration Date. The Plan shall terminate at the end of the
Company's fiscal year in 2011, or on such earlier date determined by the Board.
Any termination shall not affect any options then outstanding under the Plan. No
options may be granted after termination.
5. Amendment and Termination.
The Board may from time to time amend, suspend or discontinue the Plan
provided that, subject to the provisions of Section 4.8 above, no action of the
Board may permit the granting of any option at the option price less than that
determined in accordance with Section 4.4 above; adjust or change the Grant Date
determined under Section 4.1 above; or shorten the period provided for in
Section 4.3 above. However, the Plan may not be amended more than once every six
months other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder. Without the
written consent of an optionee, no amendment or suspension of the Plan shall
alter or impair any option previously granted to him or her under the Plan. The
Board may, subject to limitations in the Plan, modify, extend or renew
outstanding options granted under the Plan, or accept the surrender of
outstanding options to the extent unexercised.
6. Effective Date
The Plan was adopted by the Board of Directors of the Company to be
effective as of August 15, 2001, and its effectiveness is subject to approval by
the shareholders of the Company and is also subject to the termination of the
1993 Outside Directors Stock Option Plan, as amended, effective as of the close
of business on August 14, 2001.
9
DAKTRONICS, INC.
Annual Meeting of Shareholders - August 15, 2001
CONFIDENTIAL VOTING INSTRUCTIONS TO THE TRUSTEE
DAKTRONICS INC. 401(k) PROFIT SHARING PLAN AND TRUST
The undersigned directs that the voting rights pertaining to the common stock of
Daktronics, Inc. held by the Daktronics, Inc. 401(k) Profit Sharing Plan and
Trust and allocable to my account under such plan shall be exercised at the
Annual Meeting of Shareholders of Daktronics, Inc., to be held at Daktronics,
Inc., 331 32nd Avenue, Brookings, South Dakota 57006 on Wednesday, August 15,
2001 at 7:00 p.m. Central Daylight Time, and at any adjournments thereof, in
accordance with the specifications appearing below.
1. To elect directors duly nominated for a term expiring in 2004 (If you wish
the Trustee to cumulate your votes as described in the Proxy Statement,
please contact Investor Relations at Daktronics, Inc. to record your vote):
James B. Morgan, Duane E. Sander, John L. Mulligan.
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHELD FOR THE FOLLOWING ONLY
(Write nominee's name)________________________________
2. To ratify the appointment of McGladrey & Pullen, LLP as independent
auditors for the Company for the fiscal year ending April 27, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to approve the Amendment to the
Amended and Restated Articles of Incorporation increasing the shares
authorized to be issued from 30,000,000 to 60,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To consider and vote upon a proposal to approve the Daktronics, Inc. 2001
Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To consider and vote upon a proposal to approve the Daktronics, Inc. 2001
Outside Directors Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To consider and act upon any other matters that may properly come before
the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In accordance with the terms of the Trust Agreement, the Trustee's
representative will tabulate the instructions from all Participants and vote all
shares held in the Trust according to the instructions. IF NO INSTRUCTIONS ARE
GIVEN FOR VOTING ON THE MATTERS ABOVE, THE TRUSTEE WILL VOTE THE SHARES IN THE
SAME PROPORTION AS THE SHARES WHICH ARE VOTED BY ALL PARTICIPANTS UNDER THE
401(k) PLAN.
The undersigned acknowledges receipt of the Proxy Statement for the 2001 Annual
Meeting. Please sign below exactly as name(s) appears on this Voting
Instruction. If a beneficiary, note that capacity.
Date ___________________________, 2001
_______________________________________
Signature
PLEASE SIGN, DATE, AND RETURN THIS VOTING INSTRUCTION PROMPTLY. No postage is
required if returned in the enclosed envelope. This may also be returned to the
Daktronics Personnel department by putting it in any "out" basket. Voting
Instructions must be received by the Personnel department no later than noon 14
August 2001.
DAKTRONICS, INC.
Annual Meeting of Shareholders - August 15, 2001
PROXY
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Aelred J. Kurtenbach and Duane E. Sander, or
either of them, as proxy of the undersigned, with full power of substitution,
for and in the name of the undersigned, to represent the undersigned at the
Annual Meeting of Shareholders of Daktronics, Inc., to be held at Daktronics,
Inc., 331 32nd Avenue, Brookings, South Dakota 57006 on Wednesday, August 15,
2001 at 7:00 p.m. Central Daylight Time, and at any adjournments thereof, and to
vote all stock of the undersigned, as designated below, with all the powers
which the undersigned would possess if personally at such meeting.
1. To elect directors duly nominated for a term expiring in 2004 (If you
wish to cumulate your votes as described in the Proxy Statement, please
contact Investor Relations at Daktronics, Inc. to record your vote):
James B. Morgan, Duane E. Sander, John L. Mulligan.
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHELD FOR THE FOLLOWING ONLY
(Write nominee's name)______________
2. To ratify the appointment of McGladrey & Pullen, LLP as independent
auditors for the Company for the fiscal year ending April 27, 2002.
[ ] FOR [ ] AGAINST [ ]ABSTAIN
3. To consider and vote upon a proposal to approve the Amendment to the
Amended and Restated Articles of Incorporation increasing the shares
authorized to be issued from 30,000,000 to 60,000,000.
[ ] FOR [ ] AGAINST [ ]ABSTAIN
4. To consider and vote upon a proposal to approve the Daktronics, Inc.
2001 Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To consider and vote upon a proposal to approve the Daktronics, Inc.
2001 Outside Directors Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To consider and act upon any other matters that may properly come
before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE GIVEN FOR
VOTING ON THE MATTERS ABOVE, THIS PROXY WILL BE VOTED FOR THE MATTERS ABOVE.
Shareholders who are present at the meeting may withdraw their Proxy and vote in
person if they so desire.
The undersigned acknowledges receipt of the Proxy Statement for the 2001 Annual
Meeting. Please sign below exactly as name(s) appears on this Proxy. If shares
are registered in more than one name, the signatures of all persons are
required. If a corporation, sign in full corporate name by a duly authorized
officer, stating title. If trustee, guardian, executor or administrator, sign in
official capacity, giving full title as such. If a partnership, sign in
partnership name by authorized person.
Date ___________________________, 2001
_____________________________________
Signature
______________________________________
Signature if held jointly
PLEASE SIGN, DATE, AND RETURN THIS PROXY PROMPTLY. No postage is required if
returned in the enclosed envelope. This Proxy may also be returned via fax to
605/697-4700.